June 22, 2007 at 08:44 AM EDT
A BIK House
State Street is launching its version of a BRIC ETF today (well scheduled for today) under ticker BIK. As I understand it, the fund should be mighty mighty. Ahem. The break down should be as follows; China 37.59%, Russia 32.33%, Brazil, 22.80% and India 7.28%. It is heaviest in energy, no shock, at 36.6%, financials 28.5%, telecom 14% and then a few others in single digits. China Mobile (a holding for a couple of clients) is the largest holding in the fund at 8.97% followed by Gazprom 7.09%, Lukoil (client and personal holding) 6.59%, CVRD (yet another client holding) 4.96% and Petrobras rounds out the top five at 4.60%. Infosys weighs in for India at number 10 with a 3.41% weight. You may know that Claymore has a BRIC ETF (EEB) of its own and if I recall correctly iShares has one in the hopper. BIK is noticeably different than EEB. EEB only has 4.77% in Russia and has 45% in Brazil. Hard to say which one is "better." Obviously if Brazil is the best market in the world EEB will do better and if Russia turns out to be the best BIK will be the better choice. But there is no way to know ahead of time. The benefit to this type of fund is obviously getting the exposure to what have been and could continue to be very hot markets without single stock risk--by any reasonable definition. The downside is that it would not makes sense to hold the fund if you were bearish on one of the countries. In taking the riskier path of picking a stock you potentially get a more precise impact on your account which is something I believe in doing. For example with Brazil every product I have looked at includes Banco Bradesco and Banco Itau. When I think of Brazil I think or resources so a materials stock just makes more sense; it strikes me as being simpler. Regardless of what you think of that I think it is a good think that investors have some choice for BRIC exposure.
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